Optimal pricing and offering reward decisions in a competitive closed-loop dual-channel supply chain with recycling and remanufacturing

Recycling of materials has two significant perspectives: it may reduce the waste, and also, it can save raw materials. This study deals with the returned-obsolete products and the fresh items in a closed-loop dual-channel supply chain, where the manufacturer operates the whole production department and sells a percentage of products directly through his online channel, and delivers the rest of them to the retailer at a wholesale price. Additionally, the retailer collects unused items from customers with an appropriate reward to determine whether the customers intend to return the items. Both players screen the condition of the collected materials and then transfer the qualified materials for further use. Our paper formulates a mathematical model to evaluate scenarios such as scenarios manufacturer Stackelberg, Retailer Stackelberg, vertical Nash under the decentralized system, and a centralized system. The study is primarily concerned with finding optimal pricing plans and rewarding the customer analytically under various scenarios. Numerical explorations signify that the manufacturer Stackelberg's scenario is more economical than the retailer Stackelberg and vertical Nash frameworks. The findings illustrate that the higher acceptance ratios of the returned materials benefit all the members and increase the keenness to return. Also, it is important for members to control the price-sensitive parameters within the demand function in order to save their markets. Further, the study suggests that an increase in production cost forces us to collect more returned materials, regardless of whether the increased remanufacturing cost suppresses that collection.